M&C SAATCHI
PLC
Unaudited results for the
six months ended 30 June 2024
Strong performance, building
foundations for future growth
Financial summary
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Like-for-like (LFL)
1 results
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Statutory results(4)
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H1 2024
£m
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H1 2023
£m
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% change
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H1 2024
£m
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H1 2023
£m
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% change
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|
Revenue
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211.5
|
202.9
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4%
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213.6
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216.7
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(1)%
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Net revenue2
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120.1
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112.8
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6%
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120.4
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120.4
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0%
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Operating profit
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17.1
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12.2
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40%
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14.1
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(3.6)
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-
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Operating profit margin
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14.2%
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10.8%
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+3.4ppts
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11.7%
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(3.0)%
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+14.7ppts
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Profit/loss before
taxation
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14.2
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11.3
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26%
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11.3
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(5.1)
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-
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Net cash2
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12.9
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15.4
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(16)%
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EPS (Diluted)
3
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6.4p
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(5.2)p
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-
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[1] Like-for-like
(LFL) results adjust Headline results (Statutory results excluding
one-offs and exceptionals) to exclude subsidiaries discontinued in
2023 and in H1 2024 and retranslate 2023 figures to 2024 FX
rates.
2 Refer to Notes for the definition of Net revenue and net
cash.
3 Earnings are calculated after deducting tax and the share of
profits attributable to non-controlling interests. Please see note
5 for a detailed view on Statutory vs. Headline EPS.
4 Within statutory reporting, profitability includes the
improved cost management and mix benefits which are also in LFL,
and, in addition, the impact of the exit of loss-making businesses
over the last twelve months. The decrease in net cash
reflects the short-term impact of the settlement of put option
liabilities.
Note: Note 1 of the financial statements reconciles Statutory
results to Headline results. In order to provide a better basis for
understanding our current and future performance, we provide
commentary on LFL figures, where applicable, instead of Headline
figures. Headline results are covered in the reports and accounts
below and reflect the underlying profitability of the business
units, by excluding a number of items that are not part of routine
expenses.
Group performance - highlights
· Strong LFL Net revenue
growth of 6%, driven by 7% growth
in Non-advertising Specialisms, largely Issues and Media, whilst
Advertising grew 6%. Strong regional performances from the UK
(+12.9%), Europe (+16.7%) and the Middle East (+47.6%)
· Significant improvement in
profitability driven by the global
cost efficiency program, local cost actions, loss making business
exits (particularly in Advertising), and improved mix:
o LFL operating profit
grew 40%, primarily due to
Advertising
o Operating margins of 14.2%
(+3.4ppts), driven by higher-margin
Non-advertising Specialisms at 23.4% margin (+2.2ppts), and
Advertising at 11.4% margin (+7.2ppts)
o LFL profit before tax
increased 26%
· Statutory earnings per share
at 6.4p (H1 2023: 5.2p loss)
reflects the underlying profitability improvement, assisted by a
further reduction in put option liabilities, with minority
interests now at 6% of earnings, down from 18% at H1
2023
· Cash
generation: Net cash of £12.9
million (£-2.5 million movement vs H1 2023), however, net cash
improved by £4.6 million vs FY 2023 (£8.3 million) having settled
£5.9 million of put options in H1 2024; operating cash conversion
rate was high at 98%[1]
· Global cost efficiency
programme remains on track to
deliver annualised savings of £10 million by the end of FY 2024,
having delivered £4.5 million in H1 2024 on top of £3.9 million
achieved in FY 2023
· Transformation investment
continues with key hires to build
the team for the future, including high-profile joint Chief
Creative Officers, Global Head of Passions & PR, and the
internal promotion of the UK Group CEO
· Repeat
business remains strong with c.75% of 2023
clients choosing to spend in H1 2024; new wins across our
geographies and Specialisms include McDonalds, Ford, Danone, MTN,
IKEA and Sony Pictures, adding to our strong blue-chip client
roster
Operational LFL performance - highlights
· Advertising:
the significantly improved revenue growth was
driven by momentum in the US, Europe and the Middle East,
particularly versus difficult market conditions in H1 2023, while
the closures of loss-making businesses and our back-office cost
savings drove enhanced profitability:
o Net revenue was £45.2 million (+6%), contributing 38% to
Group Net revenue
o Operating profit was £5.1 million (+183%)
o Operating margin was 11.4% (+7.2ppts)
· Non-advertising
Specialisms[2]: the strong topline performance was driven primarily by Issues
reflecting growing demand from the security and government segments
(+30%) and some recovery in Media (+3%). Profitability from
the higher-margin Non-advertising Specialisms was also very strong,
reflecting our back-office cost savings programme and some exits
from loss-making businesses:
o Net revenue was £74.8 million (+7%), contributing 62% of the
Group Net revenue
o Operating profit was £17.5 million (+18%)
o Operating margin was 23.4% (+2.2ppts)
Transformation journey reinforcing
creativity
· We
are building a more efficient, stronger and scalable platform, with
senior regional leadership to drive regional-first
go-to-market
· Our
new structure with centralised services frees up creativity, and we
are developing a culture which preserves our entrepreneurial
spirit. Employee engagement metrics are steady, with the response
rate well above the benchmark level
· Our
newly appointed high-profile, experienced leaders have already
boosted our talent and, critically, strengthened the foundations
for the next phase of our growth (with further new joiners in
H2)
· We
are democratising our data stack and technology, bringing several
new products to market and for internal use, including those
powered by AI
Outlook in line with market expectations
Our strong first half performance
and solid Q3 trading to-date underpin our confidence in delivering
in line with FY 2024 market expectations, despite continued market
volatility, tougher H2 comparators and further investment in talent
expected in the second half.
Looking forward, we expect the
increasing strength and diversity of our portfolio, the progress in
the execution of our cost efficiency programme, and a more
integrated and regional-first agile operating model, to provide
sustainable organic growth, as well as resilience in the continuing
volatile macro environment. Our
transformation strategy continues, building foundations
for long-term sustainable growth and returns for
shareholders.
Zaid Al-Qassab, Chief Executive Officer,
said:
"I am delighted to present this strong set of results, my
first as CEO, which demonstrate the benefits of our ongoing
transformation and diversity of our specialisms. Whilst preserving
creativity at the heart of all we do, and leveraging the power of
our global brand, we are creating a more agile, integrated,
regional-first operating model which focuses on
growth.
"My first impressions of the Group are incredibly positive:
from the diversity of the businesses, operating from twenty-three
geographies, the breadth of our capabilities, and the fantastic
global brand of M&C Saatchi, to the creative and talented minds
delivering inspiring work and outstanding service to our
clients.
"We continue to make great progress in building a strong
platform to deliver sustainable organic growth through our
self-help initiatives and wider transformation. Our increasingly
diversified revenue provides greater resilience against macro
volatility, and our higher-margin businesses continue to be our
highest growth contributors. Whilst there is always more to do, we
are excited about the further potential we can
unleash.
"Looking forward, despite continued volatility within our
markets, we are confident that we are on track to deliver against
market expectations for FY 2024, whilst noting the tougher second
half comparators. We will continue to deliver on our cost saving
programme whilst also making strategic investments in the second
half of the year to underpin our ambition of long-term sustainable
growth and delivering strong returns for
shareholders."
M&C Saatchi 2024 Interim Results
presentation
Zaid Al-Qassab, Chief Executive
Officer, and Simon Fuller, Chief Financial Officer, will host an
in-person presentation for analysts and investors at 9.00am BST on
18 September 2024 at 36 Golden Square, London
W1F 9EE. To register your interest,
please contact Headland Consultancy at MCSaatchi@headlandconsultancy.com.
A replay will be also available on
the Company's website following the event at https://mcsaatchiplc.com/
Investor Meet Company presentation
In addition, M&C Saatchi will
be hosting a separate live presentation hosted by Zaid Al-Qassab
and Simon Fuller for retail investors via the Investor Meet Company
platform on the same day at 12.30pm BST.
The presentation is open to all
existing and potential shareholders. Questions can be submitted
pre-event up until 9.00am BST the day before via the Investor Meet
Company dashboard or at any time during the live
presentation.
Those wishing to sign up and join
the meeting online, can do so here:
https://www.investormeetcompany.com/mc-saatchi-plc/register-investor
Investors who already follow
M&C Saatchi on the Investor Meet Company platform will
automatically be invited.
FURTHER INFORMATION
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M&C Saatchi
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+44 (0)20-7543-4500
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Zaid Al-Qassab, Chief Executive
Officer
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Simon Fuller, Chief Financial
Officer
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Tom Fahey, Head of Investor
Relations
Jill Sherratt, Investor
Relations
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Headland Consultancy
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+44 (0)20-3805-4822
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Rob Walker, Charlie Twigg, Tan
Siddique
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Panmure Liberum - Nominated adviser and joint
broker
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+44 (0)20-3100-2000
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Max Jones, Edward Mansfield, Will
King
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Deutsche Numis - Joint broker
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+44 (0)20-7260-1000
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Nick Westlake, Iqra
Amin
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PERFORMANCE REVIEW
Financial performance highlights
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Like-for-like
(LFL)1
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Headline
2
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£m
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H1
2024
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H1
2023
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Change %
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H1 2024
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H1 2023
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Change %
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Net revenue3
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120.1
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112.8
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6%
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120.4
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120.4
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0%
|
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Operating profit
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17.1
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12.2
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40%
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17.5
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10.0
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75%
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Operating profit margin
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14.2%
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10.8%
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+3.4ppts
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14.5%
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8.3%
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+6.2ppts
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PBT
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14.2
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11.3
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26%
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14.6
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8.8
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66%
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EBITDA4
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21.5
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14.5
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48%
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Net cash3
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12.9
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15.4
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(16)%
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EPS
(Diluted)5
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7.9p
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4.5p
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[1] Like-for-like
(LFL) applies constant foreign exchange rates and removes entities
discontinued during 2023 and H1 2024 from Headline
results.
2 Headline results reflect the underlying
profitability of the business units, by excluding a number of items
that are not part of routine expenses. Note 1 of the financial
statements reconciles Statutory results to Headline
results.
3 Refer to Notes for the definition of Net revenue, and net
cash.
4 EBITDA is calculated excluding the income statement charges
relating to IFRS 16.
5 Earnings are calculated after deducting tax and the share of
profits attributable to non-controlling interests. Please see note
5 for detailed view on Statutory vs. Headline EPS.
This is a strong set of results
which demonstrate both the fundamental strengths of our business
and the benefits of our ongoing transformation. This includes
the impact of our cost efficiency programme, Project Forward, and
the exit from loss-making businesses. As the financial
benefit of the latter is, by definition, excluded in the LFL
measurement, the LFL results provide a meaningful base for future
performance.
Our improved LFL Net revenue
growth of 6% has been underpinned by M&C Saatchi's powerful,
global brand, creativity, and our iconic and loyal client
base. We won repeat business from c.75% of 2023 clients in H1
2024 and achieved significant new business wins.
Our profitability improvement is
significantly driven by our transformation
initiatives. Cost savings achieved in H1 amounted to £4.5 million
on an annualised basis, on top of the £3.9 million annualised
savings achieved in FY 2023 and we are on
track to deliver annualised savings of £10 million by the end of
2024, as previously announced. Due to these cost saving
initiatives operating profit rose 40% and operating margin was
14.2% (+3.4ppts). Headline EBITDA grew 48% to £21.5 million
(H1 2023: £14.5 million). LFL PBT rose 26% while
Headline PBT rose 66%.
Headline Diluted EPS at 7.9p (H1
2023: 4.5p), is largely a result of improved profitability as well
as the significant reduction in minorities to 6% of earnings from 18% as a result of the continued
reduction in put option liabilities. We are well on track for
minorities to be less than 5% of earnings in H2, at the lower end
of market expectations.
The settlement of put options
absorbed £5.9 million of cash in H1 and net cash stood at £12.9
million, down 16% or £(2.5) million vs. H1 2023 but up 55% or £4.6
million vs FY 2023. During H2 2024 we
expect to settle a further £2.9 million of put options, leaving us
with a residual liability of c.£5.6 million at a 195p share price
(the share price as at 30 June 2024). The operating cash conversion
rate was high at 98% and compares favorably to our longer-term
target of 80% cash conversion, allowing for some degree of
variability through the cycle.
The Group is exposed to movements
in foreign currency exchange rates on the translation of the
results of its overseas businesses. The LFL basis applies the
constant foreign exchange applicable for the current period to the
comparative period in order to present the results on a comparable
basis. Key Group currency movements reflected weakness in the
Australian Dollar and Euro versus Sterling while the US Dollar was
broadly flat.
OPERATIONAL REVIEW
Like-for-like reconciled to Headline
summary
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Net
revenue
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Operating
profit
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H1 2024
|
H1 2023
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Change
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H1 2024
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H1 2023
|
Change
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£m
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£m
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£m
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£m
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Non-advertising
Specialisms
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74.8
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70.0
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7%
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17.5
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14.8
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18%
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Advertising
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45.2
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42.8
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6%
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5.1
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1.8
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183%
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Group Central Costs
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0
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0
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-5.6
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-4.4
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27%
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Total LFL (excl. discontinued)
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120.1
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112.8
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6%
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17.1
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12.2
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40%
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Restated FX
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2.9
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(0.1)
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Discontinued
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0.3
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4.7
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0.4
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(2.1)
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Total Headline
|
120.4
|
120.4
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0%
|
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17.5
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10.0
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75%
|
|
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|
|
|
|
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Non-advertising Specialisms
delivered LFL Net revenue of £74.8 million (+7%), contributing 64%
of Group Net revenue, while Advertising delivered £45.2 million,
(+6%), contributing to the balance.
Non-advertising Specialisms
performance was fuelled by 30% growth in Issues, highlighting our
leading market position and the specific expertise that we have
developed in this field. Media showed some recovery (+3%) against
the more difficult year in 2023. Advertising grew 6%, thanks
to good momentum in the US, the Middle East and Europe.
Our higher-margin Non-advertising
Specialisms delivered a significant increase in operating profit,
up 18%, with operating margin of 23.4% (+2.2ppts), with good
revenue growth, mix improvements and management of the cost
base. Advertising's 183% growth in operating profit, with
operating margin at 11.4% (+7.2ppts) was largely driven by strong
management of the cost base as well as the exit from loss-making
businesses.
Group costs increased largely due
to bonus accrual in H1 2024, after the more challenging 2023
performance.
Individual Specialisms LFL
performance
Advertising
38% of LFL Group Net revenue,
in-line with in H1 2023
· LFL
Net revenue of £45.2 million (+6%) (H1 2023: £42.8
million)
· Headline Net revenue of £45.2 million (+2%) (H1 2023: £44.3
million)
The first half of the year has
shown an overall improvement in momentum across multiple
markets, albeit against a weaker H1
2023, with good revenue growth in the US,
Europe and the Middle East. This was driven by a combination of new
client wins as well as retained client work from 2023. Market
conditions in Australia and the UK remain challenging, largely due
to subdued consumer sentiment and macro challenges.
Issues
22% of LFL Group Net revenue, up
from 19% in H1 2023
· LFL
Net revenue of £27.0 million (+30%) (H1 2023: £20.7
million)
· Headline Net revenue of £27.0 million (+28%) (H1 2023: £21.0
million)
Strong growth continued in the
first half, driven by a combination of continued client work and
new wins with multi-year engagements. We continue to develop our
expertise in this unique and deeply specialised field of work, and
see good momentum with a positive outlook for 2024.
Passions &
PR[3]
16% of LFL Group Net
revenue, up from 14% in H1 2023
· LFL
Net revenue of £18.9 million (-4%) (H1 2023: £19.6
million)
· Headline Net revenue of £18.9 million (-5%) (H1 2023: £19.9
million)
Passions now includes our PR
business which will benefit from greater synergies (moved from
Advertising after the management restructure in H1 2024 to reflect
the "owned and earned" nature of these activities). This specialism
also encompasses our award-winning Sport
& Entertainment and Talent businesses. With management's focus
on sustainable profitability, we are actively managing the shape of
our Passions client base. Without the PR business, growth would
have been slightly ahead of H1 2024, due to multi-year client
engagements and new client wins. The outlook for 2024 is affected
by the negative impact of the PR business.
Consulting
14% of LFL Group Net revenue, down
from 15% in H1 2023
· LFL
Net revenue of £16.6 million (-7%) (H1 2023: £17.8
million)
· Headline Net revenue of £16.6 million (-9%) (H1 2023: £18.3
million)
Broader market challenges continue in this sector, largely due to
wider economic pressures resulting in lower client budgets.
We continue to develop our M&C Saatchi Consulting branded
proposition, offering clients transformative growth via specialist
expertise, supported by digital and data solutions, including
AI. We remain cautious on
the market backdrop for 2024, given sector
challenges.
Media
10% of LFL Group Net revenue,
consistent with H1 2023
· LFL
Net revenue of £12.3 million (+3%) (H1 2023: £11.9
million)
· Headline Net revenue of £12.3 million (+2%) (H1 2023: £12.1
million)
This specialism registered a good recovery in the first half of
2024. While 2023 was held back by macro-economic slowdown, which
adversely impacted technology sector spend in particular, the start
of the year has seen broad client wins in other industries, across
a range of geographies. We are encouraged by recent momentum but
remain cautious on the market backdrop for 2024.
SENIOR MANAGEMENT AND THE
BOARD
The Board
As previously announced, Chief
Executive Officer Zaid Al-Qassab was appointed to the Company's
Board of Directors as an Executive Director effective 16 May 2024.
Concurrently, Zillah Byng-Thorne returned to her role as
Non-Executive Chair after serving as Executive Chair. Additionally,
Simon Fuller was appointed to the Board of Directors as an
Executive Director on 1 July 2024, alongside his appointment as
Chief Financial Officer on the same date.
Bruce Marson, previously Chief
Financial Officer, stepped down from the Board on 30 June 2024 and
reverted to the position of Deputy Chief Financial Officer. The
Board once again thanks Bruce Marson for the key role he has played
in the transformation of M&C Saatchi since he joined the
Company in October 2021, stepping up to Chief Financial Officer in
March 2023.
Executive
management
In the first half of the year, the
Group has made several changes within the senior management and
wider senior leadership team, which
prioritise growth through creativity and talent.
As announced in recent months, the
Group welcomes two industry titans, Rob Doubal and Laurence (Lolly) Thomson,
as new global joint chief creative officers effective from 16
September 2024. Additionally, Jo Bacon, who recently joined, was
appointed CEO of M&C Saatchi's UK Group business, and Nadja
Bellan-White, CEO of SS+K, now represents the US on the Executive
Leadership Team. Finally, Robin Clarke has been appointed as
Global CEO of the Passions & PR specialism, effective October.
With nearly 25 years of experience in the sports and entertainment
industry, he brings exceptional leadership and his expansive
network.
STRATEGIC UPDATE - PROGRESS ON
TRANSFORMATION
Our transformation journey is
founded on creativity, and, by leveraging the global brand of
M&C Saatchi, we are building a scalable, agile and integrated
platform to unleash the full potential of the
Group. These results demonstrate the effectiveness of this
transformation.
New operating model
We have made good progress with building a
simplified operating model which places our regional focus and
global specialist expertise at the heart of everything we do. This
is a client-focused model, providing integrated solutions which cut
through the complexity clients face every day.
By outsourcing many of our non-creative activities to our new
service centres (in South Africa and
India), we have freed our people to focus
on client service, creativity and driving revenue. Overall,
the structural improvement delivered by these actions builds
operational leverage into our model and supports future margin
accretion.
The mix and breadth of our
diversified portfolio, combined with the broad offering of creative
solutions and Specialisms across the value chain, geographies and
capabilities, means that the Group is increasingly resilient
against cyclical exposure.
Cost savings
Operational cost savings have been
a key focus for both 2023 and 2024 and most recently
include:
· People: continued optimisation and rationalisation of group
support functions, including Finance, IT and HR, by creating shared
service centres to support the Group on a global
basis. While there is still more work
to be done, these structural changes to our cost base alongside our
new operating model are increasing our operational leverage
potential which will help support future margin
expansion
· Procurement: rationalisation of our cost base via supplier
relationships such as IT service provision through group-wide
deployments and a global approach to provision (including common
collaboration tools)
· Property: rationalising office space, particularly in the UK,
the US and Australia
Although there is still more to be
done, we have made good progress, and remain on course to deliver
annualised savings of £10 million by the end of 2024, with £4.5
million annualised achieved in H1 2024 on top of the £3.9 million
annualised achieved in FY 2023.
Rationalisation of our
portfolio
We have continued to review our
portfolio, in particular a number of non-core or loss-making
businesses. In 2023, the Group exited from businesses that, in
aggregate, represented a consolidated c.£9 million of revenue and
c.£3 million of operating losses in 2023. Since then, the Group
has:
· Sold
the Swiss business in March 2024 which contributed £823k of revenue
in FY 2023 (£183k in H1 2024)
· Announced the divestment of its shares in the M&C Saatchi
South Africa Group with an expected close date of 30 September
2024. The cash consideration for the shares of the M&C Saatchi
South Africa Group of £5.6 million will be retained by the
Group. In the year ended 31 December 2023, the M&C
Saatchi South Africa Group generated Net revenue of £16.1 million
(£5.5 million Net revenue in H1 2024) and consolidated profit after
tax of £1.3 million (£0.7 million excluding minority
interests)
For a number of the businesses
that have been disposed of over the past 18 months, we have entered
into agreements that enable these businesses to continue to use the
M&C Saatchi brand. These businesses will pay an ongoing licence
fee to the Group and remain connected to our global network. This
allows us to continue to offer global scale to clients, share in
their success as independent businesses, and transforms them into a
profit contributor for the Group.
Democratisation of data stack and
technology
We have developed our
existing suite of innovative new data and technology solutions
designed to meet growing client demand for services relating to
brand experience and strategy, audience acquisition and retention,
and campaign optimisation. Our innovative solutions capitalise on
significant breakthroughs in AI including (but not limited to)
computer vision and large language models and enable us to offer
clients critical advantage in strategic decision-making.
We have also simplified access to
our fast-growing data and technology services, both directly to
clients and internally across our business divisions. Our
specialist data function is democratising access to this advanced
data stack across the organisation, ensuring all staff can leverage
best-in-class solutions to the benefit of all our clients globally.
Reduction of put option drag on
cash and earnings
As of 30 June 2024, our minority
interests stand at 6% of Group Headline earnings, down from 18% in
H1 2023. Based on the put option holders that have exercised in
2024, around one-third of the remaining liability will be settled
in H2 2024. This is expected to reduce minority interests to below
5% of Headline earnings in 2024, down from nearly 40% in 2019. This
significantly reduces the dilution to the Group's
earnings.
Net cash
at 30 June 2024 was £12.9 million (£8.3 million at 31 December
2023). During H1 2024, we cash-settled £5.9 million of put options.
During H2 we expect to settle a further £2.9 million of put
options, leaving us with a residual liability of c.£5.6 million at
a 195p share price (at 30 June 2024).
CAPITAL ALLOCATION
Our approach to capital allocation
remains unchanged:
· M&C Saatchi is a capital light business which, over the
medium-term, is capable of converting at least 80% of its operating
profits into cash, subject to some degree of variability through
the cycle. Our streamlined portfolio of businesses, our new
operating model, and our go-to-market strategy give us a high
degree of confidence in the potential for sustainable and growing
free cash generation
· Our
strategy to evolve and grow M&C Saatchi will require
investment. We will seek to re-invest to drive long-term growth and
to add capability, capacity and scale in the parts of the Group
that will generate the greatest return. We will remain open to
opportunities to accelerate that through selective M&A,
addressing gaps in our client-facing capabilities and regional
coverage
· We
are comfortable operating with a net debt to EBITDA ratio not
exceeding 1.5 times, although we would allow for a temporary spike
in the case of a material acquisition
· By
simplifying our Group, re-investing in growth, and selective
bolt-on acquisitions, we believe we can deliver a compelling
proposition of a robust, optimal balance sheet and returns to
shareholders including capital growth and a progressive year-end
dividend
OUTLOOK
Our strong first half performance
and solid Q3 trading to-date underpin our confidence in delivering
in line with FY 2024 market expectations, despite continued market
volatility, tougher H2 comparators and further investment in talent
expected in the second half.
Looking forward, we expect the
increasing strength and diversity of our portfolio, the progress in
the execution of our cost efficiency programme, and a more
integrated and regional-first agile operating model, to provide
sustainable organic growth, as well as resilience in the continuing
volatile macro environment. Our
transformation strategy continues, building foundations
for long-term sustainable growth and returns for
shareholders.
FINANCIAL REPORT
|
Headline results
|
|
|
H1 2024
|
|
H1 2023
|
|
|
FY 2023
|
|
Net revenue
|
|
4
|
120,406
|
|
120,391
|
|
|
252,765
|
|
Operating profit
|
|
4
|
17,467
|
|
9,980
|
|
|
32,436
|
|
Profit before tax
|
|
4
|
14,558
|
|
8,848
|
|
|
28,669
|
|
Profit after tax attributable to
equity shareholders of the Group
|
|
4
|
10,026
|
|
5,462
|
|
|
18,545
|
|
EBITDA
|
|
4
|
21,467
|
|
14,524
|
|
|
41,544
|
This report covers the key items
presented in the following financial statements.
Income Statement
· Statutory Profit Before
Tax
Statutory profit before tax was
£11.3m (H1 2023: £5.1m loss). This profit was primarily driven by
reduced staff costs in 2024.
· Taxation
The effective tax rate for H1 2024
has increased to 27.8% (H1 2023: 23.7%). This is mainly due to the
increase in corporation tax rate in the UK from 19% to 25% in April
2023.
· Earnings
The Headline earnings increased,
and minority interests were further reduced in H1 to 6% (from 18%
in H1 2023).
Balance sheet and cashflow
· Cash and
Borrowings
Operating cash inflow before
movements in working capital was £13.2 million, which was higher
than last year (£4.2 million in H1 2023), in line with the higher
profitability.
We invested £0.9 million, similar
to last year, buying replacement IT equipment, fit-outs for new
offices in the US and South Africa. We paid out £5.9 million to
settle put options and reduce our minority interests (with more to
come in H2). We also paid what was due on our property leases (£2.8
million), down from £4.4 million last year.
Cash net of bank borrowings at 30
June 2024 is £12.9 million, compared to £8.3 million of net cash at
31 December 2023 and £15.4 million of net cash at 30 June
2023.
· Working Capital
Movement
Trade and other receivables
decreased by £2.5 million (2%) between 30 June 2023 and 30 June
2024, driven by lower levels of prepaid balances outstanding from
clients and lower overall billings due to timing of projects. Trade
and other payables decreased by £3.1 million (2%) between 30 June
2023 and 30 June 2024, driven by the
phasing of payments.
Net working capital improved by
£2.1 million since the beginning of the year. This has been driven
predominantly by improved cash collection and increased cost
accruals in Non-advertising Specialisms, in line with increased
activity.
· Other Balance Sheet
Movements
The other movements include the
revaluation of investment properties of £0.4 million and the
reversal of impairment of right-of-use assets of £0.6 million. This
is in relation to properties that were vacated in 2023 or earlier.
Tenants have been secured and the sublease agreements signed or
heads of terms agreed.
EXPLANATORY NOTES
Company
M&C Saatchi plc, a company
incorporated and domiciled in England and Wales with company number
05114893, listed on the AIM Market of the London Stock Exchange
plc.
Group
The Company and its
subsidiaries.
Like-for-Like results: Like-for-like (LFL) results adjust Headline results
(Statutory results excluding one-offs and exceptionals) to exclude
subsidiaries discontinued in 2023 and in H1 2024 and retranslate
2023 figures to 2024 FX rates.
Headline results
A self-defined alternative measure
of profit that provides a different perspective to the Statutory
results. The Directors believe it provides a better view of the
underlying performance of the Company, because it excludes a number
of items that are not part of routine business income and expenses.
These Headline figures are a better way to measure and manage the
business and are used for internal performance management and
reward. "Headline results" is not a defined term in
IFRS.
Headline results represent the
underlying trading profitability of the Group and
excludes:
• Separately disclosed items that
are one-off in nature and are not part of running the
business.
• Impairment of non-current
assets.
• Amortisation of acquired
intangibles.
• Gains or losses generated by
disposals of subsidiaries and associates.
• Fair value adjustments to
unlisted equity investments, acquisition related contingent
consideration, investment properties and put options.
• Dividends paid to IFRS 2 put
option holders.
A reconciliation of Statutory to
Headline results is presented in Note 4.
Foreign Exchange
The Group is exposed to movements
in foreign currency exchange rates on the translation of the
results of its overseas businesses. The LFL basis applies the
constant foreign exchange applicable for the current period to the
comparative period in order to present the results on a comparable
basis. Key Group currency movements reflected weakness in the
Australian Dollar and Euro versus Sterling while the US Dollar was
broadly flat.
Key H1 2024 currencies and average FX rates used H1 2024 to
retranslate H1 2023
|
Currency
|
Jun-24
|
Dec-23
|
Sterling
Stronger/(weaker)
|
|
United Arab Emirates
Dirham
|
AED
|
4.68
|
4.64
|
0.7%
|
|
Australian $
|
AUD
|
1.90
|
1.87
|
1.5%
|
|
Euro €
|
EUR
|
1.18
|
1.15
|
2.3%
|
|
US $
|
USD
|
1.26
|
1.27
|
(0.7%)
|
|
South African Rand
|
ZAR
|
23.0
|
23.3
|
(1.2%)
|
Operating profit margin
Operating profit margin refers to
the percentage calculated through dividing operating profit by net
revenue.
Net cash
Net cash refers to cash and cash
equivalents, less borrowings of the Group, excluding lease
liabilities.
Net revenue
Net revenue is equal to revenue
less project cost / direct cost. It is not an IFRS defined term. It
is, however, used as a key performance indicator by the
Group.
Revenue
Revenue comprises the total of all gross amounts billed, or
billable, to clients in respect of commission-based, fee-based and
any other income where we act as principal and our share of income
where we act as an agent. The difference between Billings and
Revenue is represented by costs incurred on behalf of clients with
whom we operate as an agent, and timing differences where invoicing
occurs in advance or in arrears of the related revenue being
recognised.
EBITDA
EBITDA is earnings before
depreciation, amortisation, finance expense and taxation, and
excludes any charges relating to IFRS 16. It is not an IFRS defined
term. It is, however, used as a key performance indicator by the
Group.
Billings
Billings comprise all gross
amounts billed, or billable to clients in respect of
commission-based and fee-based income, whether acting as agent or
principal, together with the total of other fees earned, in
addition to those instances where the Group has made payments on
behalf of customers to third parties. It is stated exclusive of VAT
and sales taxes.
Minority interests and non-controlling
interests
Within the Group, there are a
number of subsidiary companies and partnerships in which employees
hold a direct interest in the equity of those companies. These
employees are referred to as minority shareholders. Of these
subsidiary companies and partnerships, most account for the
shareholding of their minority shareholders as a management
incentive (through the award of conditional shares) and are 100%
consolidated in the Group's financial statements. The remaining
four subsidiary companies (including one without a put option)
account for their minority shareholders as non-controlling
interests, a defined IFRS term, with their share of the Group's
profits being shown separately on the Income Statement.
UNAUDITED CONSOLIDATED INCOME STATEMENT
|
Headline results
|
|
Six months ended 30 June
2024
|
Six months ended 30 June
2023
|
Year ended 31 December
2023
|
|
|
Note
|
|
£000
|
|
£000
|
|
£000
|
|
Billings
|
|
|
243,982
|
|
250,448
|
|
526,013
|
|
Revenue
|
|
|
213,554
|
|
216,672
|
|
453,913
|
|
Project cost / direct
cost
|
|
|
(93,148)
|
|
(96,281)
|
|
(201,148)
|
|
Net revenue
|
|
|
120,406
|
|
120,391
|
|
252,765
|
|
Staff costs
|
|
|
(86,583)
|
|
(99,030)
|
|
(187,621)
|
|
Depreciation
|
|
|
(3,809)
|
|
(4,458)
|
|
(8,816)
|
|
Amortisation
|
|
|
(366)
|
|
(397)
|
|
(841)
|
|
Impairment reversal /
(charges)
|
|
|
720
|
|
(426)
|
|
(6,798)
|
|
Other operating charges
|
|
|
(16,053)
|
|
(17,731)
|
|
(36,876)
|
|
Other gains / (losses)
|
|
|
339
|
|
(1,922)
|
|
(4,898)
|
|
Loss allowance
|
|
|
(192)
|
|
-
|
|
(422)
|
|
Gain / (loss) on disposal of
subsidiaries
|
|
|
(315)
|
|
304
|
|
782
|
|
Operating profit/(loss)
|
|
|
14,147
|
|
(3,269)
|
|
7,275
|
|
Share of results of associates and
joint ventures
|
|
|
(26)
|
|
(14)
|
|
121
|
|
Other non-operating
income
|
|
|
27
|
|
-
|
|
-
|
|
Finance income
|
|
|
278
|
|
874
|
|
831
|
|
Finance costs
|
|
|
(3,172)
|
|
(2,650)
|
|
(7,512)
|
|
Profit/(loss) before taxation
|
|
|
11,254
|
|
(5,059)
|
|
715
|
|
Taxation
|
|
|
(3,127)
|
|
(1,223)
|
|
(3,517)
|
|
Profit/(loss) for the period
|
|
|
8,127
|
|
(6,282)
|
|
(2,802)
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
Equity shareholders of the
Group
|
|
|
8,113
|
|
(6,376)
|
|
(3,529)
|
|
Non-controlling
interests
|
|
|
14
|
|
94
|
|
727
|
|
Profit/(loss) for the period
|
|
|
8,127
|
|
(6,282)
|
|
(2,802)
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
Basic (pence)
|
5
|
|
6.64p
|
|
(5.22)p
|
|
(2.89)p
|
|
Diluted (pence)
|
5
|
|
6.40p
|
|
(5.22)p
|
|
(2.89)p
|
|
|
|
|
|
|
|
|
|
|
Headline results
|
|
|
|
|
|
|
|
|
Net revenue
|
4
|
|
120,406
|
|
120,391
|
|
252,765
|
|
Operating profit
|
4
|
|
17,467
|
|
9,980
|
|
32,436
|
|
Profit before tax
|
4
|
|
14,558
|
|
8,848
|
|
28,669
|
|
Profit after tax attributable to
equity shareholders of the Group
|
4
|
|
10,026
|
|
5,462
|
|
18,545
|
|
EBITDA
|
|
|
21,467
|
|
14,524
|
|
41,544
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED CONSOLIDATED COMPREHENSIVE INCOME
STATEMENT
|
|
|
|
Six months ended 30 June
2024
|
Six months
ended
30 June
2023
|
Year ended
31 December
2023
|
|
|
|
|
£000
|
£000
|
£000
|
|
Profit/(Loss) for the period
|
|
|
8,127
|
(6,282)
|
(2,802)
|
|
Other comprehensive income/(loss)
|
|
|
|
|
|
|
Exchange differences on
translating foreign operations before tax
|
|
|
146
|
(3,657)
|
(4,287)
|
|
Other comprehensive income/(loss) for the period net of
tax
|
|
|
146
|
(3,657)
|
(4,287)
|
|
Total comprehensive income/(loss) for the
period
|
|
|
8,273
|
(9,939)
|
(7,089)
|
|
Total comprehensive income/(loss)
attributable to:
|
|
|
|
|
|
|
Equity shareholders of the
Group
|
|
|
8,259
|
(10,033)
|
(7,816)
|
|
Non-controlling
interests
|
|
|
14
|
94
|
727
|
|
Total comprehensive income/(loss) for the
period
|
|
|
8,273
|
(9,939)
|
(7,089)
|
UNAUDITED CONSOLIDATED BALANCE
SHEET
|
|
|
|
Six months
ended
30 June
2024
|
|
Six months
ended
30 June
2023
|
|
Year ended
31 December
2023
|
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
34,128
|
|
39,812
|
|
34,593
|
|
Investments in associates and
JVs
|
|
|
113
|
|
177
|
|
138
|
|
Plant and equipment
|
|
|
6,887
|
|
7,793
|
|
7,007
|
|
Right-of-use assets
|
|
|
30,219
|
|
39,191
|
|
33,772
|
|
Investment properties
|
|
|
2,134
|
|
-
|
|
2,369
|
|
Other non-current
assets
|
|
|
3,503
|
|
1,290
|
|
2,302
|
|
Deferred tax assets
|
|
|
6,015
|
|
5,878
|
|
6,036
|
|
Financial assets at fair value
through profit or loss
|
|
|
7,215
|
|
10,796
|
|
7,227
|
|
Deferred and contingent
consideration
|
|
|
253
|
|
738
|
|
738
|
|
|
|
|
90,467
|
|
105,675
|
|
94,182
|
|
Current assets
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
|
|
127,517
|
|
130,054
|
|
123,686
|
|
Current tax assets
|
|
|
3,969
|
|
5,274
|
|
4,321
|
|
Cash and cash
equivalents
|
|
|
31,915
|
|
27,393
|
|
24,326
|
|
|
|
|
163,401
|
|
162,721
|
|
152,333
|
|
Assets held for sale
|
|
|
-
|
|
-
|
|
780
|
|
|
|
|
163,401
|
|
162,721
|
|
153,113
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Trade and other
payables
|
|
|
(139,477)
|
|
(142,649)
|
|
(133,850)
|
|
Provisions
|
|
|
(32)
|
|
(487)
|
|
(1,050)
|
|
Current tax liabilities
|
|
|
(2,662)
|
|
(2,551)
|
|
(743)
|
|
Borrowings
|
|
|
(199)
|
|
(157)
|
|
(15,943)
|
|
Lease liabilities
|
|
|
(5,759)
|
|
(6,003)
|
|
(5,751)
|
|
Minority shareholder put option
liabilities
|
|
|
(4,412)
|
|
(21,578)
|
|
(9,891)
|
|
|
|
|
(152,541)
|
|
(173,425)
|
|
(167,228)
|
|
Net current (liabilities) / assets
|
|
|
10,860
|
|
(10,704)
|
|
(14,115)
|
|
Total assets less current liabilities
|
|
|
101,327
|
|
94,971
|
|
80,067
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Deferred tax
liabilities
|
|
|
(920)
|
|
(1,939)
|
|
(1,235)
|
|
Borrowings
|
|
|
(18,797)
|
|
(11,795)
|
|
-
|
|
Lease liabilities
|
|
|
(41,024)
|
|
(45,890)
|
|
(43,692)
|
|
Minority shareholder put option
liabilities
|
|
|
(3,482)
|
|
(5,075)
|
|
(3,525)
|
|
Other non-current
liabilities
|
|
|
(1,988)
|
|
(3,566)
|
|
(2,079)
|
|
|
|
|
(66,208)
|
|
(68,265)
|
|
(50,531)
|
|
Total net assets
|
|
|
35,116
|
|
26,706
|
|
29,536
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
1,227
|
|
1,227
|
|
1,227
|
|
Share premium
|
|
|
50,327
|
|
50,327
|
|
50,327
|
|
Merger reserve
|
|
|
37,554
|
|
37,554
|
|
37,554
|
|
Treasury reserve
|
|
|
(1,666)
|
|
(550)
|
|
(550)
|
|
Minority interests put option
reserve
|
|
|
(2,175)
|
|
(2,506)
|
|
(2,506)
|
|
Non-controlling interests
acquired
|
|
|
(33,119)
|
|
(33,251)
|
|
(33,168)
|
|
Hedging reserve
|
|
|
201
|
|
-
|
|
-
|
|
Foreign exchange
reserve
|
|
|
2,497
|
|
2,981
|
|
2,351
|
|
Accumulated loss
|
|
|
(20,228)
|
|
(29,092)
|
|
(26,232)
|
|
Equity attributable to shareholders of the
Group
|
|
|
34,618
|
|
26,690
|
|
29,003
|
|
Non-controlling
interests
|
|
|
498
|
|
16
|
|
533
|
|
Total equity
|
|
|
35,116
|
|
26,706
|
|
29,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
|
|
Share
capital
|
Share
premium
|
Merger
reserve
|
Treasury
reserve
|
MI put option
reserve
|
Non-controlling interests
acquired
|
Hedging
reserve
|
Foreign exchange
reserves
|
Retained earnings/
(accumulated losses)
|
Subtotal
|
Non-controlling interests in
equity
|
Total
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
At 31 December 2023
|
1,227
|
50,327
|
37,554
|
(550)
|
(2,506)
|
(33,168)
|
-
|
2,351
|
(26,232)
|
29,003
|
533
|
29,536
|
|
Share option charge
|
-
|
-
|
-
|
(1,116)
|
-
|
-
|
-
|
-
|
104
|
(1,012)
|
-
|
(1,012)
|
|
Hedge revaluation
|
-
|
-
|
-
|
-
|
-
|
-
|
201
|
-
|
-
|
201
|
-
|
201
|
|
Disposal of
subsidiaries
|
-
|
-
|
-
|
-
|
331
|
49
|
-
|
-
|
(265)
|
115
|
(49)
|
66
|
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,948)
|
(1,948)
|
-
|
(1,948)
|
|
Total transactions with owners
|
-
|
-
|
-
|
(1,116)
|
331
|
49
|
201
|
-
|
(2,109)
|
(2,644)
|
(49)
|
(2,693)
|
|
Total profit for the
period
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
8,113
|
8,113
|
14
|
8,127
|
|
Total other comprehensive loss for
the period
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
146
|
-
|
146
|
-
|
146
|
|
At 30 June 2024
|
1,227
|
50,327
|
37,554
|
(1,666)
|
(2,175)
|
(33,119)
|
201
|
2,497
|
(20,228)
|
34,618
|
498
|
35,116
|
|
|
Share
capital
|
Share
premium
|
Merger
reserve
|
Treasury
reserve
|
MI put option
reserve
|
Non-controlling interests
acquired
|
Foreign exchange
reserves
|
Retained earnings/
(accumulated losses)
|
Subtotal
|
Non-controlling interests in
equity
|
Total
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
At 31 December 2022
|
1,227
|
50,327
|
37,554
|
(550)
|
(2,896)
|
(32,984)
|
6,638
|
(21,303)
|
38,013
|
173
|
38,186
|
|
Share option charge
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
434
|
434
|
-
|
434
|
|
Exercise of Minority Interest put
options
|
-
|
-
|
-
|
-
|
390
|
(184)
|
-
|
-
|
206
|
(206)
|
-
|
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,834)
|
(1,834)
|
(161)
|
(1,995)
|
|
Total transactions with owners
|
-
|
-
|
-
|
-
|
390
|
(184)
|
-
|
(1,400)
|
(1,194)
|
(367)
|
(1,561)
|
|
Total (loss) for the
year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,529)
|
(3,529)
|
727
|
(2,802)
|
|
Total other comprehensive income
for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(4,287)
|
-
|
(4,287)
|
-
|
(4,287)
|
|
At 31 December 2023
|
1,227
|
50,327
|
37,554
|
(550)
|
(2,506)
|
(33,168)
|
2,351
|
(26,232)
|
29,003
|
533
|
29,536
|
UNAUDITED CONSOLIDATED CASHFLOW STATEMENT AND ANALYSIS OF NET
CASH
|
|
|
Six months ended 30 June
2024
|
|
Six months ended 30 June
2023
|
|
Year ended
31 December
2023
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
Operating profit/(loss)
|
|
14,147
|
|
(3,573)
|
|
7,275
|
|
Adjustments for:
|
|
|
|
|
|
|
|
Depreciation of plant and
equipment
|
|
1,145
|
|
1,250
|
|
2,573
|
|
Depreciation of right-of-use
assets
|
|
2,664
|
|
3,208
|
|
6,243
|
|
Impairment (reversal) of
right-of-use assets
|
|
(633)
|
|
463
|
|
1,884
|
|
Loss on sale of plant and
equipment
|
|
(2)
|
|
22
|
|
271
|
|
Impairment of plant and
equipment
|
|
-
|
|
-
|
|
132
|
|
Loss on sale of software
intangibles
|
|
-
|
|
1
|
|
-
|
|
Revaluation of investment
properties
|
|
(361)
|
|
-
|
|
-
|
|
Revaluation of financial assets at
FVTPL
|
|
22
|
|
1,922
|
|
4,722
|
|
Revaluation of contingent
consideration
|
|
-
|
|
-
|
|
176
|
|
Amortisation and impairment of
acquired intangible assets
|
|
176
|
|
296
|
|
1,764
|
|
Impairment reversal of associates
and investments
|
|
(87)
|
|
-
|
|
-
|
|
Impairment of goodwill and other
intangibles
|
|
-
|
|
-
|
|
3,733
|
|
Impairment and amortisation of
capitalised software intangible assets
|
|
190
|
|
101
|
|
138
|
|
Exercise of IFRS 2 put
options
|
|
(3,004)
|
|
-
|
|
(14,637)
|
|
Purchase of shares
(EBT)
|
|
(1,116)
|
|
-
|
|
-
|
|
Equity settled share-based payment
expenses
|
|
104
|
|
491
|
|
841
|
|
Operating cash before movements in working
capital
|
|
13,246
|
|
4,181
|
|
15,115
|
|
Decrease/(Increase) in trade and
other receivables
|
|
(1,700)
|
|
2,486
|
|
9,924
|
|
(Decrease)/Increase in trade and
other payables
|
|
3,996
|
|
(8,683)
|
|
(24,437)
|
|
(Decrease)/Increase in
provisions
|
|
(1,018)
|
|
(569)
|
|
(6)
|
|
Working capital movement
|
|
1,278
|
|
(6,766)
|
|
(14,519)
|
|
Cash generated from operations
|
|
14,524
|
|
(2,585)
|
|
596
|
|
Tax paid
|
|
(710)
|
|
(1,812)
|
|
(4,156)
|
|
Net cash (used in)/generated from operating
activities
|
|
13,814
|
|
(4,397)
|
|
(3,560)
|
|
Investing activities
|
|
|
|
|
|
|
|
Disposal of subsidiary (net of
cost disposed of)
|
|
(81)
|
|
(44)
|
|
(209)
|
|
Investment loans
|
|
148
|
|
-
|
|
(608)
|
|
Proceeds from sale of unlisted
investments
|
|
638
|
|
-
|
|
49
|
|
Proceeds from assets held for
sale
|
|
857
|
|
-
|
|
-
|
|
Exercise of IFRS 9 put
options
|
|
(2,863)
|
|
-
|
|
-
|
|
Purchase of plant and
equipment
|
|
(942)
|
|
(1,402)
|
|
(1,827)
|
|
Purchase of capitalised
software
|
|
(89)
|
|
(212)
|
|
(19)
|
|
Interest received
|
|
278
|
|
302
|
|
831
|
|
Net cash (used in)/generated from investing
activities
|
|
(2,054)
|
|
(1,356)
|
|
(1,783)
|
|
Net cash (used in)/generated from operating and investing
activities
|
|
11,760
|
|
(5,753)
|
|
(5,343)
|
|
|
|
|
|
|
|
|
UNAUDITED CONSOLIDATED
CASHFLOW STATEMENT AND ANALYSIS OF NET CASH
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended
30 June
2024
|
|
Six months ended 30 June
2023
|
|
Year ended
31 December
2023
|
|
|
|
£000
|
|
£000
|
|
£000
|
|
Financing activities
|
|
|
|
|
|
|
|
Dividends paid to equity holders
of the company
|
|
(1,948)
|
|
-
|
|
(1,834)
|
|
Dividends paid to non-controlling
interests
|
|
-
|
|
(128)
|
|
(161)
|
|
Cash consideration for
non-controlling interests acquired
|
|
-
|
|
(3,264)
|
|
(785)
|
|
Payment of lease
liabilities
|
|
(2,692)
|
|
(3,051)
|
|
(6,228)
|
|
Proceeds from bank
loans
|
|
2,887
|
|
5,000
|
|
9,000
|
|
Repayment of bank loans
|
|
(33)
|
|
(106)
|
|
(164)
|
|
Borrowing costs
|
|
(795)
|
|
-
|
|
-
|
|
Interest paid
|
|
(1,385)
|
|
(821)
|
|
(2,318)
|
|
Interest paid on lease
liabilities
|
|
(1,588)
|
|
(1,474)
|
|
(2,876)
|
|
Net cash used in financing activities
|
|
(5,554)
|
|
(3,844)
|
|
(5,366)
|
|
Net (decrease)/ increase in cash and cash
equivalents
|
|
6,206
|
|
(9,597)
|
|
(10,709)
|
|
Effect of exchange rate
fluctuations on cash held
|
|
1,184
|
|
(285)
|
|
(2,186)
|
|
Cash and cash equivalents at the
beginning of the year
|
|
24,326
|
|
37,221
|
|
37,221
|
|
Total cash and cash equivalents at the end of
period
|
|
31,716
|
|
27,339
|
|
24,326
|
|
Cash and cash
equivalents
|
|
31,915
|
|
27,393
|
|
24,326
|
|
Bank overdrafts[4]
|
|
(199)
|
|
(54)
|
|
-
|
|
Total cash and cash equivalents at the end of
period
|
|
31,716
|
|
27,339
|
|
24,326
|
|
Bank loans and
borrowings
|
|
(18,797)
|
|
(11,898)
|
|
(16,043)
|
|
Net cash
|
|
12,919
|
|
15,441
|
|
8,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1.
General information
The Company is a public limited
company incorporated and domiciled in the UK. The address of its
registered office and the Company is 36 Golden Square, London W1F
9EE.
The Company is listed on the AIM
market of the London Stock Exchange.
This consolidated half-yearly
financial information was approved for issue on 18 September
2024.
The comparative financial
information for the year ended 31 December 2023 in these interim
financial statements does not constitute statutory accounts for
that year.
The statutory accounts for the
year ended 31 December 2023 have been delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified,
did not draw attention to any matters by way of emphasis, and did
not contain a statement under 498(2) or 498(3) of the Companies Act
2006.
2.
Basis of preparation
This consolidated half-yearly
financial information for the six months ended 30 June 2024 has
been prepared on the going concern basis, in accordance with the
AIM Rules for companies. The interim
financial statements do not include all of the information required
in annual financial statements in accordance with IFRS and should
be read in conjunction with the consolidated financial statements
for the year ended 31 December 2023.
3. Use of judgements and estimates
In the course of preparing the
interim financial statements, management necessarily makes
judgements and estimates that can have a significant impact on the
interim financial statements. These estimates and judgements are
continually evaluated based on historical experience and other
factors, including expectations of future events that are believed
to be reasonable under the circumstances.
Significant accounting judgements
Management has considered the
following judgements, which have the most significant effect in
terms of the amounts recognised, and their presentation, in the
interim financial statements. These are the same accounting
estimates and judgements the Group has applied in its financial
statements for the year ended 31 December 2023:
Non-controlling interests put option
accounting - IFRS 2 or IFRS 9
The key judgement is whether the
awards are given beneficially as a result of employment, which can
be determined where there is an explicit service condition, where
the award is given to an existing employee, where the employee is
being paid below market value or where there are other indicators
that the award is a reward for employment. In such cases, the
awards are accounted for as a share-based payment in exchange for
employment services under IFRS 2.
Otherwise, where the holder held
shares prior to the Group acquiring the subsidiary, or gained the
equity to start a subsidiary using their unique skills, and there
are no indicators it should be accounted for under IFRS 2, then the
award is accounted for under IFRS 9.
· Impairment - assessment of CGUs and assessment of indicators
of impairment
Impairment reviews are undertaken
annually, or more frequently if events or changes in circumstances
indicate a potential impairment. Assets with finite lives are
reviewed for indicators of impairment (an impairment "trigger") and
judgement is applied in determining whether such a trigger has
occurred. External and internal factors are monitored by
management, including a) adverse changes in the economic or
political situation of the geographic locale in which the
underlying entity operates, b) heightened risk of client loss or
chance of client gain, and c) internal reporting suggesting that an
entity's future economic performance is better or worse than
previously expected. Where management have concluded that such an
indication of impairment exists, then the recoverable amount of the
asset is assessed.
For the interim financial
statements, management have concluded that no such indication of
impairment exists.
Significant estimates and assumptions
The areas of the Group's interim
financial statements subject to key assumptions and other
significant sources of estimation uncertainty at the reporting date
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities are described below.
The Group has based its assumptions and estimates on information
available when the interim financial statements were
prepared.
· Deferred tax assets
The Group assesses the future
availability of carried forward losses and other tax attributes by
reference to jurisdiction-specific rules around carry forward and
utilisation and it assesses whether it is probable that future
taxable profits will be available against which the attribute can
be utilised.
· Fair
value measurement of financial instruments
The Group holds certain financial
instruments which are recorded on the balance sheet at fair value
at the point of recognition and remeasured at the end of each
reporting period. At the period end these relate to:
(i) equity investments at FVTPL in
non-listed limited companies; and
(ii) certain contingent
consideration.
No formal market exists to trade
these financial instruments and, therefore, their fair value is
measured by the most appropriate valuation techniques available,
which vary based on the nature of the instruments. The inputs to
the valuation models are taken from observable markets where
possible, but where this is not feasible, judgement is required to
establish fair values.
· Share-based incentive arrangements
Share-based incentives are valued
at the date of the grant, using stochastic Monte Carlo pricing
models with non-market vesting conditions. Typically, the value of
these awards is directly related to the performance of a particular
entity of the Group in which the employee holds a minority
interest. The key inputs to the pricing model are risk-free
interest rates, share price volatility and expected future
performance of the entity to which the award relates. Management
apply judgement to these inputs, using various sources of
information, including the Company's share price, experience of
past performance and published data on risk-free interest rates
(government gilts).
· Leasing estimates
Anticipated length of lease term -
IFRS 16 defines the lease term as the non-cancellable period of a
lease, together with the options to extend or terminate a lease, if
the lessee is reasonably certain to exercise that option. Where a
lease includes the option for the Group to extend the lease term,
the Group takes a view, at inception, as to whether it is
reasonably certain that the option will be exercised. This will
take into account the length of time remaining before the option is
exercisable, current trading, future trading forecasts and the
level and type of any planned capital investment. The assessment of
whether the option will be exercised is reassessed in each
reporting period. A reassessment of the remaining life of the lease
could result in a recalculation of the lease liability and a
material adjustment to the associated balances.
4.
Headline results
Headline results - Six Months Ended 30 June
2024
|
|
Statutory
results
|
Separately disclosed
items
|
Gain/loss on disposal of
subsidiaries
|
Amortisation of acquired
intangibles
|
Impairment of intangible
assets
|
Impairment of non-current
assets
|
FVTPL investments under IFRS
9
|
Revaluation of investment
properties
|
Dividends paid to IFRS 2 put
holders
|
Put option
accounting
|
Headline
results
|
|
Six months ended 30 June
2024
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Revenue
|
213,554
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
213,554
|
|
Net revenue
|
120,406
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
120,406
|
|
Staff costs
|
(86,583)
|
1,825
|
-
|
-
|
-
|
-
|
-
|
-
|
694
|
648
|
(83,416)
|
|
Depreciation
|
(3,809)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,809)
|
|
Amortisation
|
(366)
|
-
|
-
|
178
|
-
|
-
|
-
|
-
|
-
|
-
|
(188)
|
|
Impairments
|
720
|
-
|
-
|
-
|
(87)
|
(633)
|
-
|
-
|
-
|
-
|
-
|
|
Other operating charges
|
(16,053)
|
715
|
-
|
-
|
-
|
-
|
4
|
-
|
-
|
-
|
(15,334)
|
|
Other gains/(losses)
|
339
|
-
|
-
|
-
|
-
|
-
|
42
|
(381)
|
-
|
-
|
-
|
|
Loss allowance
|
(192)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(192)
|
|
Gain/(loss) on disposal of
subsidiaries
|
(315)
|
-
|
315
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Operating profit
|
14,147
|
2,540
|
315
|
178
|
(87)
|
(633)
|
46
|
(381)
|
694
|
648
|
17,467
|
|
Share of results of associates and
JV
|
(26)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(26)
|
|
Other non-operating
income
|
27
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
27
|
|
Finance income
|
278
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
278
|
|
Finance expense
|
(3,172)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(16)
|
(3,188)
|
|
Profit before taxation
|
11,254
|
2,448
|
315
|
178
|
(87)
|
(633)
|
46
|
(381)
|
694
|
632
|
14,558
|
|
Taxation
|
(3,127)
|
(655)
|
-
|
(58)
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,840)
|
|
Profit for the year
|
8,127
|
1,885
|
315
|
120
|
(87)
|
(633)
|
46
|
(381)
|
694
|
632
|
10,718
|
|
Non-controlling
interests
|
14
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
678
|
-
|
692
|
|
Profit attributable to equity
holders of the Group
|
8,113
|
1,885
|
315
|
120
|
(87)
|
(633)
|
46
|
(381)
|
1,372
|
632
|
10,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Headline results - Six Months Ended 30 June
2023
|
|
Statutory
results
|
Separately disclosed
items
|
Amortisation of acquired
intangibles
|
Impairment of non-current
assets
|
Gain/loss on disposal of
subsidiaries
|
FVTPL investments under IFRS
9
|
Dividends paid to IFRS 2 put
holders
|
Put option
accounting
|
Headline
results
|
|
Six months ended 30 June
2023
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Revenue
|
216,672
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
216,672
|
|
Net revenue
|
120,391
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
120,391
|
|
Staff costs
|
(99,030)
|
954
|
-
|
-
|
-
|
-
|
3,668
|
6,156
|
(88,252)
|
|
Depreciation
|
(4,458)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(4,458)
|
|
Amortisation
|
(397)
|
-
|
296
|
-
|
-
|
-
|
-
|
-
|
(101)
|
|
Impairment charges
|
(426)
|
-
|
-
|
463
|
-
|
-
|
-
|
-
|
37
|
|
Other operating charges
|
(17,731)
|
423
|
-
|
-
|
-
|
(329)
|
-
|
-
|
(17,637)
|
|
Other gains/(losses)
|
(1,922)
|
-
|
-
|
-
|
-
|
1,922
|
-
|
-
|
-
|
|
Operating profit
|
(3,573)
|
1,377
|
296
|
463
|
-
|
1,593
|
3,668
|
6,156
|
9,980
|
|
Share of results of associates and
JV
|
(14)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(14)
|
|
Gain/(loss) on disposal of
subsidiaries
|
304
|
-
|
-
|
-
|
(304)
|
-
|
-
|
-
|
-
|
|
Finance income
|
874
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
874
|
|
Finance expense
|
(2,650)
|
-
|
-
|
-
|
-
|
365
|
-
|
293
|
(1,992)
|
|
Profit before taxation
|
(5,059)
|
1,377
|
296
|
463
|
(304)
|
1,958
|
3,668
|
6,449
|
8,848
|
|
Taxation
|
(1,223)
|
(363)
|
(72)
|
-
|
-
|
(514)
|
-
|
-
|
(2,172)
|
|
Profit/(Loss) for the
year
|
(6,282)
|
1,014
|
224
|
463
|
(304)
|
1,444
|
3,668
|
6,449
|
6,676
|
|
Non-controlling
interests
|
(94)
|
-
|
-
|
-
|
-
|
-
|
(1,120)
|
-
|
(1,214)
|
|
Profit attributable to equity
holders of the Group
|
(6,376)
|
1,014
|
224
|
463
|
(304)
|
1,444
|
2,548
|
6,449
|
5,462
|
Headline results - Year Ended 31 December
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory
2023
|
Separately disclosed
items
|
Gain/loss on disposal of
subsidiaries
|
Revaluation of associates on
transition to assets held for sale
|
Amortisation of acquired
intangibles
|
Impairment of intangible
assets
|
Impairment of non-current
assets
|
FVTPL investments under IFRS
9
|
Dividends paid to IFRS 2 put
holders
|
Put option
accounting
|
Headline
results
|
|
Year ended 31 December
2023
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Revenue
|
453,913
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
453,913
|
|
Net revenue
|
252,765
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
252,765
|
|
Staff costs
|
(187,621)
|
6,908
|
-
|
-
|
-
|
-
|
-
|
-
|
2,499
|
4,203
|
(174,011)
|
|
Depreciation
|
(8,816)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(8,816)
|
|
Amortisation
|
(841)
|
-
|
-
|
-
|
537
|
-
|
-
|
-
|
-
|
-
|
(304)
|
|
Impairments
|
(6,798)
|
-
|
-
|
-
|
-
|
4,794
|
2,004
|
-
|
-
|
-
|
-
|
|
Other operating charges
|
(37,298)
|
744
|
-
|
-
|
-
|
-
|
-
|
(644)
|
-
|
-
|
(37,198)
|
|
Other losses
|
(4,898)
|
-
|
-
|
-
|
-
|
-
|
-
|
4,898
|
-
|
-
|
-
|
|
Gain on disposal of
subsidiaries
|
782
|
-
|
(782)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Operating profit
|
7,275
|
7,652
|
(782)
|
-
|
537
|
4,794
|
2,004
|
4,254
|
2,499
|
4,203
|
32,436
|
|
Share of results of associates and
JV
|
121
|
-
|
-
|
(133)
|
-
|
-
|
-
|
-
|
-
|
-
|
(12)
|
|
Finance income
|
831
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
831
|
|
Finance expense
|
(7,512)
|
-
|
-
|
-
|
-
|
-
|
-
|
813
|
-
|
2,113
|
(4,586)
|
|
Profit before taxation
|
715
|
7,652
|
(782)
|
(133)
|
537
|
4,794
|
2,004
|
5,067
|
2,499
|
6,316
|
28,669
|
|
Taxation
|
(3,517)
|
(1,821)
|
-
|
-
|
(198)
|
(28)
|
(536)
|
(1,178)
|
-
|
(65)
|
(7,343)
|
|
Profit for the year
|
(2,802)
|
5,831
|
(782)
|
(133)
|
339
|
4,766
|
1,468
|
3,889
|
2,499
|
6,251
|
21,326
|
|
Non-controlling
interests
|
727
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2,054
|
-
|
2,781
|
|
Profit attributable to equity
holders of the Group
|
(3,529)
|
5,831
|
(782)
|
(133)
|
339
|
4,766
|
1,468
|
3,889
|
4,553
|
6,251
|
18,545
|
5.
Earnings per share
Earnings per share - Six Months Ended 30 June
2024
Basic and diluted earnings per
share are calculated by dividing appropriate earnings metrics by
the weighted average number of the Company's ordinary shares in
issue during the year.
Diluted earnings per share is
calculated by adjusting the weighted average number of the
Company's shares in issue on the assumption of conversion of all
potentially dilutive ordinary shares. The dilutive effect of
unvested outstanding put options is calculated based on the number
that would vest had the balance sheet date been the vesting date.
In 2023, since the Company made a Statutory loss, no diluted
earnings per share is calculated.
|
|
|
|
|
|
|
|
|
Statutory
2024
|
Headline
2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to equity shareholders of the Group
(£000)
|
|
|
|
8,113
|
10,026
|
|
|
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares (thousands)
|
|
|
|
|
|
122,101
|
122,101
|
|
|
Basic earnings per share
|
|
|
|
|
|
|
|
6.64p
|
8.21p
|
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares (thousands) as above
|
|
|
|
|
122,101
|
122,257
|
|
|
Add:
|
|
|
|
|
|
|
|
|
- LTIP
|
|
|
|
|
2,373
|
2,373
|
|
|
- Put options (payable in cash)
|
|
|
|
|
2,365
|
2,365
|
|
|
Total
|
|
|
|
|
126,839
|
126,839
|
|
|
Diluted EPS
|
|
|
|
|
6.40p
|
7.90p
|
|
|
Excluding the put options
(payable in cash)
|
|
|
|
|
(2,365)
|
(2,365)
|
|
|
Weighted average numbers of
shares (thousands) including dilutive shares
|
|
|
|
|
124,474
|
124,474
|
|
|
Diluted EPS - excluding items the Group intends and is able
to pay in cash
|
|
|
|
6.52p
|
8.05p
|
|
Earnings per share - Six Months Ended 30 June
2023
|
|
|
|
|
|
|
|
|
Statutory
2023
|
Headline
2023
|
|
|
|
Profit attributable to equity shareholders of the Group
(£000)
|
|
|
|
(6,376)
|
5,462
|
|
|
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares (thousands)
|
|
|
|
|
|
122,257
|
122,257
|
|
|
Basic (loss)/earnings per share
|
|
|
|
|
|
|
|
(5.22)p
|
4.47p
|
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares (thousands) as above
|
|
|
|
|
122,257
|
122,257
|
|
|
Diluted (loss)/earnings per share
|
|
|
|
|
|
|
|
(5.22)p
|
4.47p
|
|
Earnings per share - Year Ended 31 December
2023
|
Year ended 31 December 2023
|
Statutory
2023
|
Headline
2023
|
|
Profit attributable to equity shareholders of the Group
(£000)
|
(3,529)
|
18,545
|
|
Basic earnings per share
|
|
|
|
Weighted average number of
shares (thousands)
|
122,257
|
122,257
|
|
Basic EPS
|
(2.89)p
|
15.17p
|
|
Diluted earnings per share
|
|
|
|
Weighted average number of
shares (thousands) as above
|
122,257
|
122,257
|
|
Add
|
|
|
|
- LTIP
|
-
|
1,500
|
|
- Put
options
|
-
|
5,247
|
|
Total
|
122,257
|
129,004
|
|
Diluted EPS
|
(2.89)p
|
14.38p
|
|
Excluding the put options
(payable in cash)
|
-
|
(5,247)
|
|
Weighted average numbers of
shares (thousands) including dilutive shares
|
122,257
|
123,757
|
|
Diluted EPS - excluding items the Group intends and are able
to pay in cash
|
(2.89)p
|
14.99p
|
6. Separately disclosed items
Separately disclosed items include
significant one-off, non-recurring revenues or expenses. These are
shown separately and are excluded from Headline profit to provide a
better understanding of the underlying results of the
Group.
30 June 2024
Separately disclosed items for the
six months ended 30 June 2024 comprise the following:
|
|
|
|
|
|
|
|
Staff
costs
£000
|
Operating
costs
£000
|
Taxation
£000
|
Total
£000
|
|
Restructuring - ongoing
businesses
|
1,200
|
10
|
(317)
|
893
|
|
Restructuring - global cost
efficiency programme
|
248
|
252
|
(123)
|
377
|
|
Transformation project
costs
|
535
|
453
|
(255)
|
733
|
|
Other
|
(158)
|
-
|
40
|
(118)
|
|
|
|
|
|
|
|
Total separately disclosed items
|
1,825
|
715
|
(655)
|
1,885
|
|
|
|
|
|
|
|
|
The Group has been pursuing a
strategy to simplify its operating structure and improve efficiency
across the Group. This restructuring programme continued into
2024:
· Local businesses within the Group have continued to review
their own future, permanent operational structures, following
market changes, which has resulted in staff redundancy costs in the
period across seven ongoing businesses across the Group. The
restructuring costs are treated as separately disclosed items only
when a role has been permanently eliminated from the business
(there should be no intention for the role to be replaced in the
next 12 months). There are £1,200k of redundancy costs included
within non-Headline restructuring for ongoing businesses, and £174k
of redundancy costs are included within the Headline staff
costs.
· The
Group's global cost efficiency programme has continued to identify
and reduce specific central HQ and local support function roles,
which will be replaced overseas to save cost. The redundancy costs
associated with this restructuring programme have been treated as
an exceptional non-Headline cost, as they are one-off exit
costs.
In H2 2022, the Group commenced a
global cost efficiency programme. The staff costs of the project
team dedicated to this transformation project (£535k) have been
classified as separately disclosed items in line with the treatment
in 2022 and in 2023. The project team will continue to manage the
project through to conclusion in 2025. The programme's operating
costs mainly relate to recruitment costs for roles in our new
overseas service centres, travel costs relating to the programme,
and service charges and rates for the 30 Great
Pulteney Street office in London, which has been fully
vacated.
Other includes CEO compensation
credit relating to the over-accrual of 3 months of staff costs in
2023 which arises from the gardening leave of the former CEO
which was legally committed by the business, but had no benefit for
the business. The cost was treated as an exceptional
non-Headline cost in 2023 and the reversal of this over-accrual has
also been treated as an exceptional item in 2024.
30
June 2023
Separately disclosed items for the
six months ended 30 June 2023 comprise the following:
|
|
|
|
|
|
|
|
Staff
costs
£000
|
Operating
costs
£000
|
Taxation
£000
|
Total
£000
|
|
|
Global cost efficiency
programme
|
106
|
421
|
(132)
|
395
|
|
|
Local strategic review and
restructuring
|
848
|
2
|
(231)
|
619
|
|
|
Total separately disclosed items
|
954
|
423
|
(363)
|
1,014
|
|
|
|
|
|
|
|
|
|
|
|
PricewaterhouseCoopers LLP
assisted with the global cost efficiency programme which commenced
in H2 2022. The professional and legal fees and staff costs
incurred in relation to this project were classified as
non-Headline (£527k).
In addition, within nine of the
agencies in the Group, a strategic review has been commenced which
has resulted in staff redundancy costs in the period. The strategic
review and restructuring costs are treated as separately disclosed
items only when a role has been permanently eliminated from the
business (there should be no intention for the role to be replaced
in the next 12 months). There are £848k of redundancy costs
included within non-Headline strategic review and restructuring,
and £150k of redundancy costs are included within the Headline
staff costs.
7.
Segmental information [5]
The Group's operating segments are
aligned to those business units that are regularly evaluated by the
chief operating decision maker ("CODM"), namely the Board, in
making strategic decisions, assessing performance and allocating
resources.
We primarily assess the Group's
performance by division, namely Advertising, Non-advertising
Specialisms and Group Central Costs. The segmental information is
reconciled to the Headline results in Note 4.
Please note that prior year
comparatives have been restated according to the updated division
and geographic segments. A summary of relevant changes between 2023
and 2024 is included in a table below.
Segmental Information by Division
|
|
Advertising
|
Non-advertising
Specialisms
|
Group central
Costs
|
Local Central
Costs
|
Discontinued
subsidiaries
|
Total
|
|
Six Months Ended 30 June 2024
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Net revenue
|
45,235
|
74,832
|
-
|
-
|
340
|
120,406
|
|
Operating profit/(loss)
|
5,133
|
16,319
|
(5,558)
|
1,167
|
405
|
17,467
|
|
Operating profit margin
|
11%
|
22%
|
-
|
-
|
119%
|
14%
|
|
Profit/(loss) before tax
|
4,775
|
17,168
|
(7,002)
|
(789)
|
405
|
14,558
|
|
|
Advertising
|
Non-adverting
Specialisms
|
Group Central
Costs
|
Local Central
Costs
|
Discontinued
subsidiaries
|
Total
|
|
Six Months Ended 30 June 2023 (restated)
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Net revenue
|
44,259
|
71,321
|
-
|
-
|
4,811
|
120,391
|
|
Operating profit/(loss)
|
1,818
|
13,183
|
(4,356)
|
1,521
|
(2,185)
|
9,980
|
|
Operating profit margin
|
4%
|
19%
|
-
|
-
|
(45%)
|
8%
|
|
Profit/(loss) before tax
|
1,700
|
13,371
|
(2,455)
|
(1,435)
|
(2,333)
|
8,848
|
|
|
Advertising
|
Non-advertising
Specialisms
|
Group Central
Costs
|
Local Central
Costs
|
Discontinued
subsidiaries
|
Total
|
|
Year Ended 31 December 2023 (restated)
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Net revenue
|
93,752
|
149,567
|
-
|
-
|
9,446
|
252,765
|
|
Operating profit/(loss)
|
9,105
|
33,234
|
(7,642)
|
652
|
(2,913)
|
32,436
|
|
Operating profit margin
|
10%
|
22%
|
-
|
-
|
(31%)
|
13%
|
|
Profit/(loss) before tax
|
8,864
|
34,555
|
(7,396)
|
(4,179)
|
(3,176)
|
28,669
|
Segmental Information by Geography
|
|
UK
|
Europe
|
Middle East
|
Africa
|
Asia Pacific
(APAC)
|
Americas
|
Group Central
Costs
|
Discontinued
|
Total
|
|
Six Months Ended 30 June 2024
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Net revenue
|
52,460
|
5,823
|
4,532
|
7,991
|
27,171
|
22,090
|
-
|
340
|
120,406
|
|
Operating profit/(loss)
|
13,522
|
1,157
|
736
|
994
|
3,820
|
2,391
|
(5,558)
|
405
|
17,467
|
|
Operating profit margin
|
26%
|
20%
|
16%
|
12%
|
14%
|
11%
|
-
|
119%
|
14%
|
|
Profit/(loss) before tax
|
12,622
|
1,162
|
707
|
956
|
3,304
|
2,403
|
(7,002)
|
405
|
14,558
|
|
|
UK
|
Europe
|
Middle East
|
Africa
|
Asia Pacific
(APAC)
|
Americas
|
Group Central
Costs
|
Discontinued
|
Total
|
|
Six Months Ended 30 June 2023 (restated)
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Net revenue
|
46,827
|
5,112
|
3,148
|
7,792
|
30,232
|
22,468
|
-
|
4,811
|
120,391
|
|
Operating profit/(loss)
|
9,121
|
866
|
259
|
774
|
3,662
|
1,840
|
(4,356)
|
(2,185)
|
9,980
|
|
Operating profit margin
|
19%
|
17%
|
8%
|
10%
|
12%
|
8%
|
-
|
(45%)
|
8%
|
|
Profit/(loss) before tax
|
8,104
|
845
|
242
|
2,204
|
3,158
|
598
|
(2,455)
|
(2,333)
|
8,848
|
|
|
UK
|
Europe
|
Middle East
|
Africa
|
Asia Pacific
(APAC)
|
Americas
|
Group Central
Costs
|
Discontinued
|
Total
|
|
Year Ended 31 December 2023 (restated)
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
Net revenue
|
101,080
|
11,005
|
7,509
|
16,080
|
60,733
|
46,913
|
-
|
9,446
|
252,765
|
|
Operating profit/(loss)
|
21,982
|
1,716
|
1,343
|
1,869
|
9,326
|
6,755
|
(7,642)
|
(2,913)
|
32,436
|
|
Operating profit margin
|
22%
|
16%
|
18%
|
12%
|
15%
|
14%
|
-
|
(31%)
|
13%
|
|
Profit/(loss) before tax
|
20,404
|
1,676
|
1,294
|
1,753
|
8,426
|
5,688
|
(7,396)
|
(3,176)
|
28,669
|
The
changes to segmental reporting divisions and regions are summarised
as follows:
|
Agency
|
Previous Division
|
New Division
|
|
M&C Saatchi World Services
Pakistan (PVT) LTD
|
Issues
|
Advertising
|
|
Talk PR LTD
|
Advertising
|
Passions
|
|
The Source (W1) LLP
|
Advertising
|
Consulting
|
|
|
|
|
The
following agencies are included in the Discontinued subsidiaries
column:
|
|
|
|
|
|
Agency
|
Division
|
Region
|
Year discontinued
|
|
M&C Saatchi (Switzerland)
SA
|
Advertising
|
Europe
|
2024
|
|
M&C Saatchi Accelerator
Limited
|
Advertising
|
UK
|
2023
|
|
M&C Saatchi Advertising
GMBH
|
Advertising
|
Europe
|
2023
|
|
M&C Saatchi Digital
GMBH
|
Advertising
|
Europe
|
2023
|
|
M&C Saatchi Spencer Hong Kong
Limited
|
Advertising
|
Asia
|
2023
|
|
M&C Saatchi (Singapore) PTE
LTD
|
Advertising
|
Asia
|
2023
|
|
The Source (Malaysia)
|
Advertising
|
Asia
|
2023
|
|
AEIOU Shanghai
|
Advertising
|
Asia
|
2023
|
|
AEIOU Hong Kong
|
Advertising
|
Asia
|
2023
|
|
M&C Saatchi
Indonesia
|
Advertising
|
Asia
|
2023
|
|
Majority LLC
|
Advertising
|
US
|
2023
|
|
Thread Innovation LTD
|
Consulting
|
UK
|
2023
|
|
M&C Saatchi Life
Limited
|
Consulting
|
UK
|
2023
|
|
M&C Saatchi Holdings Asia PTE
LTD
|
Local Central Costs
|
Asia
|
2023
|
8.
Net finance income / (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended 30 June
2024
|
Six months ended 30 June
2023
|
Year ended
31 December
2023
|
|
|
|
£000
|
£000
|
£000
|
|
|
|
|
|
|
|
Bank interest
receivable
|
|
|
149
|
189
|
412
|
|
Other interest
receivable
|
|
129
|
682
|
414
|
|
Sublease finance income
|
-
|
3
|
5
|
|
Finance income
|
|
|
278
|
874
|
831
|
|
|
|
|
|
|
|
|
Bank interest payable
|
|
|
(1,385)
|
(788)
|
(2,318)
|
|
Amortisation of loan
costs
|
|
|
(133)
|
(95)
|
(190)
|
|
Other interest payable
|
|
|
(37)
|
-
|
(14)
|
|
Interest on lease
liabilities
|
|
(1,580)
|
(1,474)
|
(2,876)
|
|
Amortisation adjustment to
minority shareholder put option liabilities
|
|
16
|
(293)
|
-
|
|
Exchange difference on financing
activities
|
|
(53)
|
-
|
-
|
|
Valuation adjustment to IFRS 9 put
option liabilities
|
|
-
|
-
|
(2,114)
|
|
Finance expense
|
|
|
(3,172)
|
(2,650)
|
(7,512)
|
|
|
|
|
|
|
|
Net finance expense
|
|
(2,894)
|
(1,776)
|
(6,681)
|
|
|
|
|
|
|
|
|
|
9. Taxation
Income tax expenses are recognised
based on management's estimate of the average annual income tax
rate expected for the full financial year.
The estimated effective Headline
annual tax rate used for H1 2024 is 26.4% (H1 2023: 23.7%; Full
Year 2023: 25.6%).
We expect smaller variations in
future statutory tax rates due to lower amounts of significant
non-deductible items such as share-based payments (put option
charges) and dividends that are payable to minority shareholders
that are defined as a staff cost.
10.
Dividends
The Board believes that the Group
has significant growth potential. Accordingly, the Board believes
that the Group would be best served, and this potential realised,
from investing annual profits back into the business and into new
growth initiatives.
However, the Board recognises the
importance of dividends within the Company's capital allocation
policy, alongside the settlement of put options and investment in
growth initiatives. The Board therefore decided to resume the
payment of dividends in 2023 and intends to adopt a progressive
dividend policy in the future.
The Board declared a final
dividend of 1.6 pence per ordinary share for the financial year
ended 31 December 2023 (1.5 pence in 2022), which was paid in June
2024.
11.
Share-based payments
In 2021, the Board made the
decision that all put options would be settled in cash. However,
the optionality remains to issue shares in the Company to settle
put options in the future, should circumstances warrant.
Total future expected put option liabilities at 30 June
2024
|
|
|
|
Potentially
payable
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid
H1 2024
|
Payable
H2 2024
|
2025
|
2026
|
2027
|
2028
|
2029
|
Total
|
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
At 195p
|
|
|
|
|
|
|
|
|
|
IFRS9 put option
schemes*
|
2,863
|
-
|
-
|
2,701
|
-
|
-
|
-
|
2,701
|
|
IFRS2 put option
schemes**
|
3,004
|
2,907
|
574
|
2,298
|
-
|
-
|
-
|
5,779
|
|
Total
|
5,867
|
2,907
|
574
|
4,999
|
-
|
-
|
-
|
8,480
|
*
At 30 June 2024 IFRS9 put option schemes includes a £514k fair
value discount for time.
** At 30 June 2024 99% of IFRS2 put option schemes by value
were vested. The balance sheet liability at 30 June 2024 is
£5,703k.
Put option holders are not required
to exercise their put options at the first opportunity. Many do not
and prefer to remain shareholders in the subsidiary companies they
manage. As a result, some put option holders may not exercise their
put options on the dates estimated in the table above. If the
Company in the future decides to settle these put options with the
Company's shares, then the amount of Company shares that will be
provided is equal to the liability divided by the Company's share
price at the date of settlement.
For illustrative purposes, we show
the settlement values at a share price of 250p. These would
be £2,912k for H2 2024; £684k for 2025; and £5,761k for
2026.
Of the amount payable in H2 2024,
£2,897k has already been agreed to be paid.
12. Events after the balance sheet date
The Directors are not aware of any
other events since 30 June 2024 that have had, or may have, a
significant impact on the Group's operations, the results of those
operations, or the state of affairs of the Group in future
years.
[1] Conversion of
Headline operating profits into adjusted operating cash (operating
cash generated from operations (excluding put option payments and
non-Headline cash costs) net of purchases of intangible/tangible
fixed assets and the principal payment of leases).
[2] Non-advertising
Specialisms comprise Issues, Passions & PR, Consulting and
Media.
[3] Passions
includes the PR business (moved from Advertising) as of FY 2024,
with the prior year restated.
[4] These overdrafts
are legally offset against balances held in the UK; however, they
have not been netted off in accordance with the requirements of
IAS32.42.
[5] The segmental
reporting reflects Headline results
